All Forum Posts by: Moises R Cosme

I would choose the 2 $150K singles, simply for diversification. 

Elliot, 

30% is way too high for vacancy; trim that down to 16% max (that's high)

How did you arrive at 75% LTV? Did you guys put down the 25% in cash? Why do you have a management fee if its your first rental?

Your monthly mortgage should be around $800 per month; your gross rents total $1750. How did you arrive at your CapEx number?

Things to look out for:

1. You should get the rent rolls as quickly as possible; I would not proceed until I had evidence of the rent rolls.

2. Get copies of the leases

3. Ask the Seller point blank and in writing, if they have had any tenant that has been more than 60 days late on rent since he took the possession of the property.

Suggestions (based on my experience):

1. Replace the roof 

2. Replace the heating system

3. Have electrical & plumbing checked up and updated if needed

4. Get all of your numbers on a spreadsheet and work through top to bottom (I asked some questions above because it seems like you are not all the way clear on all of your numbers)

I try to get big CapEx items out of the early on; by doing so, you reduce headaches and you can start depreciating the repairs faster on your taxes. The tax act from a few years back provides incentive for replacing roofs, heating systems.

Did my first deal on my own.  I made a lot of mistakes, BUT I am glad that I did it on my own. 

Few points:

1. Experienced flippers make complicated things look really easy and it is difficult for them to teach you how they do.  As an example, ask a group of inexperienced flippers what their number 1 frustration is and I would bet that at least 80% of them would name 'dealing with a contractor' as one of those.  Pose the same question to a group of experienced flippers and their number 1 frustration is likely to be 'finding deals', 'dealing with town inspector'.  Most experienced flippers have NOT developed a distinct skill set that allows them to deal with contractors in some magical way that keeps them showing up to the job site.  Instead, most of us found great contractors over time through trial and error.  So this is one key area where watching an experienced flipper work would hinder development in my opinion, since the interactions had between an experienced flipper and a long time contractor is unlikely to yield any effective tactics.

2. Systems.  Systems can be replicated, but results cannot be duplicated simply by co opting an experienced flipper's system.  I made the change to full time investor 18 months ago, when I made the change me & my partner built every system from the ground up.  This bottom up system building allowed us to create processes that worked specifically for us.  Had I done my first deal with a mentor, I think I would have tried to rigidly adhere to their system and been unable to get their results because I have different aptitudes; this would have set me back.

3. Failure is never final!!!  I was willing to jump in to my first deal because I understand that failing is inevitable and therefore a natural part of learning.

I hope this helps!!! If you would like to ask follow up questions, feel free to message me.  

Edgar, 

1. Credit - make sure you manage it; you need credit cards & loans in order to develop it, BUT use credit sparingly.  You get max points for each line of credit by using less than 30% of your available balance.

2. Work - you need to stay in the same line of work for 2 consecutive years.

3. Money - you need to save money; typical closing costs on a purchase range from 2.25% of the purchase price over & above your down payment.

4. Reserves - you will need to have 6 month's worth of mortgage payments once you apply for the mortgage

5. Organization - find a way to simplify your life; once I got serious about owning real estate, I simplified my life (work - eat - work - work out - eat - read - sleep & do it all over again, every day until I bought my first house)

6. Talk to a loan officer!!! I highly recommend going on line & finding a loan officer to talk to, tell them what you want to do and most loan officers will give you an outline for what you need to do to qualify for the mortgage.  They will give clear numbers based on what you expect to spend.  

Isaac, 

1. Focus on being a listing agent, working with Sellers allows you to scale your business quicker and manage your time better.  

2. Leverage your experiences from your past work; if you have a background in the trades, make sure you build that into your presentation.

3. Check out Kevin Ward on YouTube, Kevin is an outstanding trainer and coach.  He has lots of videos that provide tried and true tactics to get Sellers to hire you.

4. Prospect HARD - you should spend 2 - 3 hours per day prospecting on the phone; sphere of influence prospecting should be done OVER & ABOVE prospecting strangers

Finding Sellers is simple:  the average homeowner changes homes every 7 years, expireds and FSBOs are excellent sources of business (NO MATTER what anyone says, these two areas will yield out listings as long as you work hard to become good at prospecting on the phone)

The above is the advice, I wish someone would have given me when I started out.  I hope this helps!!  Feel free to message me if you think I can help further... between me & my partner we have completed at least 1500 RE transactions, we have seen just about everything at this point.  

Welcome to the industry, stay away from people that blame the market, the buyers, the sellers...  Success in this industry is all about holding yourself accountable.  Most Agents struggle because they do not treat it like a job; it is a job, if you work hard, prepare and organize you will succeed!!!  

Chris, 

1. Get with an Agent & ask them to run a CMA for you. Have them use the following factors to determine whether you have a comp or not: age of subject (within 20 years down & up), style of subject (try to identify the approximate baseline per sq foot sales value of each style), square footage (within 200 square feet up & down), number of bedrooms (if subject has 3, you have to look at 3 or more; less than 3 bedrooms are typically less valuable because they appeal to single people instead of families), number of baths (1 is bad & you need to compare to properties that only have 1, 1.5 is less bad, 2 is good, anything more than 2 is good), parking (off street vs. on street & garage vs. no garage)

2. IF you cannot get an Agent to do the diligence for you - try to use Redfin, Realtor.com, Zillow.com.  You will need to manually go through the town/neighborhood that you want to learn about by writing down the address, the sale price, number of days on market, age of property, style of property, square footage, number of bedrooms, number of bathrooms etc.  Throw everything on a spreadsheet and follow it, that way you can start to get a really good feel for the neighborhood.

3. You can also Google:  Town/City Name GIS, this should allow you to pull up a GIS map for a specific property or street.  If you click on the record, you will normally find a 'stack' where a tax card is stored for the property.  Some towns list prior sales in their stack and this can give you a lot of good information.

3 different ways to go at it - none of these is particularly quick, but I think diligence is a lot about the process of learning through rote tactics.  I hope this helps!!!   

Kwabena, 

1. Are you sure they are all owners?  I suggest checking the registry record - sometimes you will get lucky

2. Unfortunately, I think you are stuck.  If the Seller's family friend is an owner and passed away without a will, their estate would need to be probated.  

3. Tracking down the death certificate is important, finding it should be a straightforward proposition - call the City/Town Clerk where the person died and they should be able to point you in the right direction.

4. FORTUNATELY, you do NOT need offer acceptance from all owners to have an enforceable contract; you can get signatures from the Sellers that are available and have an enforceable contract.  Once you locate an interested party for the decedent, you will need to get them on board with the sale.  The probate process requires a specific individual to accept responsibility for the estate and then requires public notices to be issued before a license to sell is ultimately issued.  Additionally, there is a cost for probate - typical probate attorney will bill between $2500 - $5000 to handle the process.

I am sorry that I cannot give you better news, I hope this helps!!! 

@Phillip Williams message me!!! Hit me up, me & my team have done like 1500 real estate deals...  Ask me questions & most of the time I can at least clarify concepts for you.  

Jermey, 

Start with your local elementary school, then work up and down from your local elementary school (the elementary school is typically placed at the center of a given town section).  The trick with driving for dollars is having a pattern to follow.  

Do you have a script if you meet a Seller?  What things do you look for that make a property attractive to you?  Do you have a package that you leave behind when you do find a vacant property that is attractive to you?

Having a script is critical, you may never get a second opportunity to pitch a Seller, so I highly recommend assuming that you will run across a Seller and will have to pitch them on the spot.

I hope this helps!!! 

@Richard J Reid  add me!!!  We try to share as much information as possible with BP community members.